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I find it interesting this exchange literally privatizes gains while socializing losses (some percentage of all futures contracts this week will be penalized to

I find it interesting this exchange literally privatizes gains while socializing losses (some percentage of all futures contracts this week will be penalized to cover the whale-fail according to the article). Without their injection of 2,500 BTC "insurance" they would probably go out of business.

21 8y ago
No they wouldn't have gone out of business. Futures is a zero-sum game, for every dollar lost there is another one won. In the worst case, they would have taken all the profits from the other traders and used them to offset this losing trader.
- jjnoakes 8y ago
  I'm stupid when it comes to this stuff. But how would that work if the traders making the profits withdrew their profits? You can't claw it back after the money leaves your accounts... right?
  - 21 8y ago
    You are right. Which is why they don't allow you to withdraw the profits until all contracts are settled: > When a close-order is executed and filled, the corresponding futures position is then closed. The unrealized profits and losses will therefore, become realized. It can be used as margin of the contract, but cannot be withdrawn until the contracts are settled.
zby 8y ago
No - it is the gains that are taxed to pay for the losses. Traders who won will have slightly smaller rewards. This is actually better solution than the traditional way of forcing the losers to cover the whole loss. When you make a position there you make slightly different bet then on traditional exchanges - but the system is more stable this way.
- officialchicken 8y ago
  No - the traders do not get a bonus or discount when the exchange profits, only the potential to be penalized. And the exchange is privately owned. Whether or not that is a better solution than well-regulated markets is a symptom. And arguably less stable - who will open an account with them now unless they offer even more leverage and re-create these same conditions?
  - zby 8y ago
    The traders get a discount when they lose and the margin call does not cover their loss. They can just walk away - while traditionally they would have to cover it all.

21 8y ago

No they wouldn't have gone out of business. Futures is a zero-sum game, for every dollar lost there is another one won. In the worst case, they would have taken all the profits from the other traders and used them to offset this losing trader.

jjnoakes 8y ago
I'm stupid when it comes to this stuff. But how would that work if the traders making the profits withdrew their profits? You can't claw it back after the money leaves your accounts... right?
- 21 8y ago
  You are right. Which is why they don't allow you to withdraw the profits until all contracts are settled: > When a close-order is executed and filled, the corresponding futures position is then closed. The unrealized profits and losses will therefore, become realized. It can be used as margin of the contract, but cannot be withdrawn until the contracts are settled.

zby 8y ago

No - it is the gains that are taxed to pay for the losses. Traders who won will have slightly smaller rewards. This is actually better solution than the traditional way of forcing the losers to cover the whole loss. When you make a position there you make slightly different bet then on traditional exchanges - but the system is more stable this way.

officialchicken 8y ago
No - the traders do not get a bonus or discount when the exchange profits, only the potential to be penalized. And the exchange is privately owned. Whether or not that is a better solution than well-regulated markets is a symptom. And arguably less stable - who will open an account with them now unless they offer even more leverage and re-create these same conditions?
- zby 8y ago
  The traders get a discount when they lose and the margin call does not cover their loss. They can just walk away - while traditionally they would have to cover it all.